It is a bright future for Australian cereal farmers as financier Rabobank predicted increased margins for all winter crops in 2024/25 due to lower cost of production.

A new report into Australia’s winter crop gross margins, forecasts that the 2024/25 wheat crop will see the largest gross margins on record at around 34%. This is a rise of 14% on 2023/24 on the year.

The bank’s predictions state that winter barley should return a gross margin of 33% and oilseed rape returns a gross margin of 26% – both a near 10% jump on the year.

Report author, RaboResearch grain and oilseeds analyst Vitor Pistoia, said these figures could have a significant bearing on growers’ planting decisions for the outcoming season.

He said this trend could favour wheat plantings, with the 2024/25 crop projected to have a gross margin of AUS$281/ha (£145/hectare), compared with an average $158/ha (£81/ha) in 2023/24.

“The gross margin forecast situates wheat as potentially the most profitable of the three major crops for 2024, together with barley,” Mr Pistoia said.

The increased margins from wheat mean there are likely to be over 12m hectares planted with over 4m hectares of barley planted. Meanwhile, the area of oilseed rape is dropping to 3m hectares.

“Also due to the lowest variable cost, wheat might expand its area over other crops, especially oilseed rape.”

Mr Pistoria said that while the price of wheat was forecast to drop 8% year on year, a predicted larger reduction in the variable costs of fertiliser and chemicals, estimated at 20%, would boost the gross margins.

“In the 2023/24 season, wheat was cropped on 12.5m hectares or 55% of the winter crop area,” Mr Pistoia said.

“Its total revenue was only exceeded by beef, and Australia is the fifth-largest exporter of wheat globally.”

He explained that wheat had been the only crop to have achieved above-average gross margins in four of the past seven seasons.

The report, meanwhile, estimates 2024/25 malting barley margins to come in at around $282/ha (£145/ha), up from an average $225/ha (£116/ha) in 2023-24.

“In combination with the benefits of barley at paddock level, such as weed control and optimising field work schedules, this sees barley as a strong and reliable crop choice for Australian farmers,” Mr Pistoia said.

While oilseed rape crops will also benefit from reduced production costs, Mr Pistoia said the gross margin for the oilseed was predicted to be lower than the wheat and barley.

He said the average gross margins for oilseed rape was forecast at $251/ha (£129/ha) in 2024/25, well up from last season’s average of $158/ha (£81/ha) but still less than the competing winter crops.